8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 23, 2015

National Bankshares, Inc.

(Exact name of Registrant as specified in its charter)

Virginia	0-15204	54-1375874
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

101 Hubbard Street

Blacksburg, VA 24060

(Address of principal executive offices)

(540) 951-6300

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report) Not applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION            

On July 23, 2015, National Bankshares, Inc. issued a press release announcing and commenting on its financial results for the quarter and six months ended June 30, 2015.  A copy of the press release is attached as Exhibit 99.1.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

99.1     National Bankshares, Inc. Press Release dated July 23, 2015.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NATIONAL BANKSHARES, INC.

Date:	July 23, 2015
By:	/s/ JAMES G. RAKES
	James G. Rakes Chairman President and CEO

Page 2 of 2 Pages

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACTS:   

JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO

(540) 951-6236   jrakes@nbbank.com

DAVID K. SKEENS, TREASURER & CFO

(540) 951-6347   dskeens@nbbank.com

NATIONAL BANKSHARES, INC. REPORTS

SECOND QUARTER AND FIRST HALF EARNINGS 

BLACKSBURG, VA, JULY 23, 2015:  National Bankshares, Inc. (NASDAQ Capital Market: NKSH) today announced its results of operations for the second quarter and first half of 2015. The Company reported net income of almost $8.08 million for the six months ended June 30, 2015 compared to $8.51 million at June 30, 2014. Basic earnings per share were $1.16 at June 30, 2015 compared to $1.23 for the same period in 2014. For the first half of the year, the return on average assets was 1.41% and the return on average equity was 9.55% compared to 1.54% and 11.22%, respectively, for the first six months of 2014. At June 30, 2015, the Company had total assets of almost $1.15 billion which was an increase of 1.75% when compared to $1.13 billion at the end of June 2014.

Commenting on the Company’s financial results, National Bankshares Chairman, President & CEO James G. Rakes said, “Loan growth of over $33.54 million, or 5.65%, from June 30, 2014 is a positive indicator of a stronger demand for credit. We continue to focus on meeting the financial needs of our customers and our employees are dedicated to striving to meet those needs.”

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of The National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc.  National Bank is a community bank operating from 26 offices throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary in the same trade area.  The Company’s stock is traded on the NASDAQ Capital Market under the symbol “NKSH.” Additional information is available at www.nationalbankshares.com.

Forward-Looking Statements

Certain statements in this press release may be “forward-looking statements.”  Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties.  Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual Company results will not differ materially from any future results implied by the forward-looking statements.  Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, competition, changes in the stock and bond markets and technology.  The Company does not update any forward-looking statements that it may make.

101 Hubbard Street / Blacksburg, Virginia 24060

P.O. Box 90002 / Blacksburg, Virginia 24062-9002

540 951-6300 / 800 552-4123

www.nationalbankshares.com

National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

($ in thousands, except for share and per share data)	June 30, 2015			June 30, 2014			December 31, 2014
Assets
Cash and due from banks	$	11,353		$	15,917		$	12,894
Interest-bearing deposits		83,818			106,112			102,548
Federal funds sold		---			---			---
Securities available for sale, at fair value		218,524			195,407			222,844
Securities held to maturity		155,704			162,956			161,452
Restricted stock		1,129			1,089			1,089
Total securities		375,357			359,452			385,385
Mortgage loans held for sale		853			383			291
Loans:
Loans, net of unearned income and deferred fees		626,941			593,400			605,466
Less: allowance for loan losses		(8,131	)		(7,971	)		(8,263	)
Loans, net		618,810			585,429			597,203
Premises and equipment, net		8,878			9,482			9,131
Accrued interest receivable		5,857			5,798			5,748
Other real estate owned		4,441			5,293			4,744
Intangible assets and goodwill		6,685			7,761			7,223
Bank-owned life insurance		22,097			21,491			21,797
Other assets		10,122			11,361			7,767
Total assets	$	1,148,271		$	1,128,479		$	1,154,731
Liabilities and Stockholders' Equity
Noninterest-bearing deposits	$	157,983		$	146,727		$	150,744
Interest-bearing demand deposits		526,749			510,304			533,641
Savings deposits		86,354			79,255			81,297
Time deposits		203,070			231,177			216,746
Total deposits		974,156			967,463			982,428
Other borrowed funds		---			---			---
Accrued interest payable		61			71			68
Other liabilities		6,484			4,149			5,932
Total liabilities		980,701			971,683			988,428
Stockholders' Equity
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding		---			---			---
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding, 6,954,474 shares at June 30, 2015, 6,950,474 at December 31, 2014 and 6,947,974 shares at June 30, 2014.		8,693			8,685			8,688
Retained earnings		167,764			158,863			163,287
Accumulated other comprehensive loss, net		(8,887	)		(10,752	)		(5,672	)
Total stockholders' equity		167,570			156,796			166,303
Total liabilities and stockholders' equity	$	1,148,271		$	1,128,479		$	1,154,731

2

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months Ended				Six Months Ended
($ in thousands, except for share and per share data)	June 30, 2015		June 30, 2014		June 30, 2015			June 30, 2014
Interest Income
Interest and fees on loans	$	7,673	$	7,819	$	15,322		$	15,754
Interest on federal funds		---		---		---			---
Interest on interest-bearing deposits		55		64		119			129
Interest on securities - taxable		1,712		1,697		3,446			3,350
Interest on securities - nontaxable		1,357		1,474		2,743			2,974
Total interest income		10,797		11,054		21,630			22,207
Interest Expense
Interest on time deposits of $100 or more		120		145		248			298
Interest on other deposits		931		1,150		1,890			2,312
Interest on borrowed funds		---		---		---			---
Total interest expense		1,051		1,295		2,138			2,610
Net interest income		9,746		9,759		19,492			19,597
Provision for loan losses		355		701		556			804
Net income after provision for loan losses		9,391		9,058		18,936			18,793
Noninterest Income
Service charges on deposit accounts		570		607		1,105			1,199
Other service charges and fees		48		38		119			103
Credit card fees		976		961		1,871			1,758
Trust Income		299		332		588			625
Bank-owned life insurance		172		177		342			352
Other income		349		229		631			506
Realized securities gains, net		5		---		3			1
Total noninterest income		2,419		2,344		4,659			4,544
Noninterest Expense
Salaries and employee benefits		3,254		3,007		6,326			6,006
Occupancy and furniture and fixtures		417		417		869			857
Data processing and ATM		409		394		843			757
FDIC assessment		135		117		270			264
Credit card processing		675		665		1,285			1,214
Intangibles and goodwill amortization		269		269		538			538
Net cost of other real estate owned		46		84		517			161
Franchise taxes		322		287		630			566
Other operating expenses		863		820		1,820			1,879
Total noninterest expense		6,390		6,060		13,098			12,242
Income before income tax expense		5,420		5,342		10,497			11,095
Income tax expense		1,310		1,233		2,421			2,582
Net income	$	4,110	$	4,109	$	8,076		$	8,513
Basic net income per share	$	0.59	$	0.59	$	1.16		$	1.23
Fully diluted net income per share	$	0.59	$	0.59	$	1.16		$	1.22
Weighted average number of common shares outstanding
Basic		6,952,540		6,947,974		6,951,513			6,947,974
Diluted		6,956,039		6,960,683		6,955,093			6,962,274
Dividends declared per share	$	0.53	$	0.55	$	0.53		$	0.55
Dividend payout ratio		---		---		45.64	%		44.89	%
Book value per share	$	24.85	$	22.57	$	24.10		$	22.57

3

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
($ in thousands, except for share and per share data)	June 30, 2015			June 30, 2014
Net income	$	4,110		$	4,109
Other Comprehensive Income (Loss), net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred tax of ($3,048) in 2015 and $1,664 in 2014		(5,665	)		3,091
Reclassification adjustment, net of income tax (benefit) of ($2) in 2015 and $0 in 2014		(3	)		---
Other comprehensive income (loss), net of tax of ($3,050) in 2015 and $1,664 in 2014	$	(5,668	)	$	3,091
Total Comprehensive Income (Loss)	$	(1,558	)	$	7,200

	Six Months Ended
($ in thousands)	June 30, 2015			June 30, 2014
Net income	$	8,076		$	8,513
Other Comprehensive Income, net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred tax of ($1,728) in 2015 and $3,345 in 2014		(3,213	)		6,212
Reclassification adjustment, net of income tax (benefit) of ($1) in 2015 and $0 in 2014		(2	)		---
Other comprehensive income (loss), net of tax of ($1,729) in 2015 and $3,345 in 2014	$	(3,215	)	$	6,212
Total Comprehensive Income	$	4,861		$	14,725

4

National Bankshares, Inc. and Subsidiaries

Key Ratios and Other Data

(Unaudited)

($ in thousands)	Three Months Ended						Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Average Balances
Cash and due from banks	$	11,537		$	11,636		$	11,451		$	11,786
Interest-bearing deposits		86,617			102,409			95,314			102,698
Securities available for sale		229,447			193,854			225,824			189,196
Securities held to maturity		155,736			164,476			157,547			163,643
Restricted stock		1,130			1,089			1,112			1,237
Mortgage loans held for sale		893			256			678			319
Gross Loans		624,598			592,073			614,922			592,205
Loans, net		623,764			583,054			605,809			583,121
Intangible assets		6,839			7,915			6,974			8,050
Total assets		1,154,036			1,116,461			1,152,733			1,112,664
Total deposits		976,427			954,592			975,118			954,163
Other borrowings		1			1			---			---
Stockholders' equity		171,616			156,045			170,461			152,975
Interest-earning assets		1,098,870			1,067,136			1,095,696			1,064,732
Interest-bearing liabilities		817,675			811,711			819,481			812,197
Financial ratios
Return on average assets		1.43	%		1.48	%		1.41	%		1.54	%
Return on average equity		9.61	%		10.56	%		9.55	%		11.22	%
Net interest margin		3.90	%		4.02	%		3.92	%		4.07	%
Net interest income-fully taxable equivalent	$	10,672		$	10,699		$	21,320		$	21,498
Efficiency ratio		48.81	%		46.46	%		50.42	%		47.01	%
Average equity to average assets		14.87	%		13.98	%		14.79	%		13.75	%
Allowance for loan losses
Beginning balance	$	8,257		$	8,297		$	8,263		$	8,227
Provision for losses		355			701			556			804
Charge-offs		(516	)		(1,053	)		(776	)		(1,244	)
Recoveries		35			26			88			184
Ending balance	$	8,131		$	7,971		$	8,131		$	7,971

5

National Bankshares, Inc. and Subsidiaries

Asset Quality Data

(Unaudited)

$ in thousands
Nonperforming assets	June 30, 2015			June 30, 2014
Nonaccrual loans	$	2,870		$	2,335
Nonaccrual restructured loans		6,035			2,674
Total nonperforming loans	$	8,905		$	5,009
Other real estate owned		4,441			5,293
Total nonperforming assets	$	13,346		$	10,302
Accruing restructured loans	$	5,943		$	6,240
Loans 90 days or more past due	$	80		$	266
Asset quality ratios
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned		2.11	%		1.72	%
Allowance for loans losses to total loans		1.30	%		1.34	%
Allowance for loan losses to nonperforming loans		91.31	%		159.13	%
Loans past due 90 days or more to loans net of unearned income and deferred fees		0.01	%		0.04	%

6